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The efficiency and market-power interpretations of the multinational enterprise: Two out of three ain't bad

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dc.contributor.authorClougherty, Joseph
dc.contributor.authorSkousen, Bradley
dc.contributor.rorhttps://ror.org/02jjdwm75
dc.date.accessioned2024-07-08T13:14:19Z
dc.date.available2024-07-08T13:14:19Z
dc.date.issued2021
dc.description.abstractResearch Summary: We contend that contemporary scholarship must embrace the foundational approach in global business and strategy to consider the relevance of both efficiency and market-power effects in factoring the implications of multinational activity. We empirically test the degree to which efficiency and market-power effects manifest in a comprehensive sample of 4,370 cross-border acquisitions materializing between 1986 and 2010. Specifically,we employ three different measurement approaches to distinguish efficiency enhancing from market-power increasing cross-border acquisitions. Empirical results indicate that efficiency enhancing transactions manifest in two-thirds and market-power increasing transactions manifest in one-third of our sampled activities. Accordingly,our results affirm the literature's focus on efficiency effects,yet market-power effects are sufficiently sizable to merit scholarly attention. Managerial Summary: Contemporary wisdom generally considers multinational activities to be characterized by efficiency properties. While it is understood that market power may manifest in multinational activity,most observers implicitly assume that anti-competitive effects are dominated by more-healthy efficiency effects. Yet,the justification behind the prior that efficiency effects dominate market-power effects is not evident,as multinational activities conceivably involve substantial market power. Accordingly,we test the received wisdom regarding the dominance of efficiency effects in an extensive sample of cross-border investments. Our empirical results affirm prevailing assumptions as efficiency enhancing transactions constitute the majority of cross-border investment activities. However,market-power increasing transactions manifest as a sizable minority of cross-border investments; thus,market-power effects should not be neglected. © 2019 The Authors. Global Strategy Journal published by John Wiley & Sons Ltd on behalf of Strategic Management Society.
dc.description.fundingtypeWe appreciate the insights and guidance from our editor, Gabriel R.G. Benito and two anonymous referees. Substantive contributions from Jin Uk Kim† and Florian Szücs were integral to the development of this research. We thank Ruth Aguilera, Jean-Francois Hennart, Joseph T. Mahoney, Ram Mudambi, Christos Pitelis, Mohammad Yamin and participants at AIB-New Orleans and SMS-Houston for helpful comments and suggestions. Finally, the research assistance from Tom DeBerge, Joseph D. Groberg and Nan Zhang was instrumental.
dc.description.keywordcross-border acquisition
dc.description.keywordFDI
dc.description.keywordmarket power
dc.description.keywordMNE
dc.description.keywordtheory of FDI
dc.formatapplication/pdf
dc.identifier.citationClougherty, J. A., & Skousen, B. R. (2021). The efficiency and market?power interpretations of the multinational enterprise: Two out of three ain't bad. Global Strategy Journal, 11(3), 356-379.
dc.identifier.doihttps://doi.org/10.1002/gsj.1360
dc.identifier.issn20425805
dc.identifier.officialurlhttps://www.scopus.com/inward/record.uri?eid=2-s2.0-85074367827&doi=10.1002%2fgsj.1360&partnerID=40&md5=ac7d44517c361245a89f50f5bc584a39
dc.identifier.urihttps://hdl.handle.net/20.500.14417/3060
dc.issue.number3
dc.journal.titleGlobal Strategy Journal
dc.language.isoeng
dc.page.final379
dc.page.initial356
dc.page.total26
dc.publisherJohn Wiley and Sons Inc
dc.relation.departmentEntrepreneurship
dc.relation.entityIE University
dc.relation.schoolIE Business School
dc.rightsAttribution-NonCommercial 4.0 International
dc.rights.accessRightsinfo:eu-repo/semantics/openAccess
dc.rights.urihttps://creativecommons.org/licenses/by-nc/4.0/
dc.subjectcross-border acquisition; FDI; market power; MNE; theory of FDI
dc.subject.keywordcross-border acquisition
dc.subject.keywordFDI
dc.subject.keywordmarket power
dc.subject.keywordMNE
dc.subject.keywordtheory of FDI
dc.titleThe efficiency and market-power interpretations of the multinational enterprise: Two out of three ain't bad
dc.typeinfo:eu-repo/semantics/article
dc.version.typeinfo:eu-repo/semantics/publishedVersion
dc.volume.number11
dspace.entity.typePublication
person.identifier.scopus-author-id6602938460
person.identifier.scopus-author-id53983407800
relation.isAuthorOfPublicationfdfdeb66-8a4b-4712-995b-bc6b0a20be86
relation.isAuthorOfPublication.latestForDiscoveryfdfdeb66-8a4b-4712-995b-bc6b0a20be86
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